Homebuyers warned again about fixed loans
The latest housing finance figures show a further surge in the number of fixed loans in New South Wales, prompting a property group to reiterate their caution to investors.
Chris Ford, NSW branch manager of The Property Club, said the state’s home lending figures reveal the number of dwellings financed through fixed loans during August 2013 surged 38 per cent compared to the same period last year – despite continued pressure on the Reserve Bank (RBA) to further lower the cash rate.
“In response to marketing campaigns from the big banks to fix, the home lending figures show that the number of fixed loans in New South Wales began to spike during April of this year and have remained high since then, with an average of 3,000 new fixed loans every month,” Mr Ford said.
“At this time, The Property Club is not recommending that property owners fix rates, as we believe they will drop even further despite these aggressive advertising campaigns from the banks to fix.”
Mr Ford said several signs indicate the RBA may be forced to drop rates again soon, so he urged investors to resist the temptation to fix their loans now.
“The RBA is under pressure to drop interest rates to stop Australia’s unemployment rate rising even further, with predictions it will shortly pass the six per cent threshold. The latest job vacancy figures show that New South Wales job vacancies in the year to August 2013 fell by five per cent. This downward trend in job vacancies is reflected in a national average of a 20 per cent decrease year-on-year,” he said.
“Fixing interest rates at the wrong time is one of the most common mistakes property investors make. Many investors, for example, were fixing their loans last year at rates above six per cent – whereas today they can fix at less than five per cent.”
Housing finance figures from July 2013 caused The Property Club to issue a similar warning on a national scale.
For advice on what to do if you have fixed rates at the wrong time, watch Smart Property Investment’s Inside Word.